Appellate Tribunal grants remission claim under Rule 21, Central Excise Rules, 2002

The Appellate Tribunal ruled in favor of the appellant in an appeal regarding the rejection of a remission of duty claim under Rule 21 of Central Excise Rules, 2002. The rejection based on non-filing of a remission application was deemed incorrect as a letter to the Commissioner was considered an application. Allegations of shortages due to clandestine removal were set aside, with the duty involved quantified at Rs. 10,30,874 in favor of the appellant. The rejection assumptions of withdrawal and lack of diligence in storing goods were also found incorrect. The appellant was granted the remission claim and directed to reverse Cenvat credit on inputs used in manufacturing lost goods.

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Issues:
Appeal against rejection of remission of duty claim under Rule 21 of Central Excise Rules, 2002.

Analysis:
1. Non-filing of Remission Application:
The appellant's claim of remission of duty was rejected on the ground of non-filing of remission application. However, the letter dated 04.08.2004 addressed to the Commissioner was considered as an application for remission under Rule 21 of the Rules, as there was no prescribed proforma for such application. Hence, the rejection on this ground was deemed incorrect.

2. Quantification of Shortages:
The department alleged shortages were due to clandestine removal, but the Commissioner (Appeals) set aside this allegation. The appellant claimed the shortages were due to goods lost in the flood, and as there was no contrary evidence provided by the Revenue, the benefit of doubt favored the appellant. The duty involved in the shortages was quantified at Rs. 10,30,874, supporting the appellant's claim.

3. Withdrawal of Remission Claim:
Although the appellant had indicated willingness to withdraw the remission application, there was no concrete evidence of the withdrawal. Mere intent to withdraw does not equate to actual withdrawal. Therefore, the rejection based on the assumption of withdrawal was deemed incorrect.

4. Diligence in Storing Goods:
The appellant faced heavy rains causing waterlogging up to 4 to 5 feet in the factory premises. Given the extreme circumstances, it was unfounded to allege lack of diligence in storing goods. The rejection on this ground was considered baseless and vague.

5. Insurance Claim and Excise Duty:
The insurance claim for goods lost in the flood was initially rejected but later allowed by the Consumer Court. Since the duty is payable upon clearance of goods and the goods lost were not duty-paid, the insurance claim did not include any duty component. Therefore, the rejection based on this ground was deemed unsustainable.

In conclusion, the Appellate Tribunal held that the appellant was entitled to claim remission of duty amounting to Rs. 10,30,874. It was also directed that the appellant reverse the Cenvat credit on inputs used in manufacturing the lost goods. The Tribunal found that the Commissioner had not correctly examined the issues and disposed of the appeal in favor of the appellant.

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